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1999-2000 Budget Summary
Prepared by the staff of The
Business Council
January 29, 1999
Issue Areas:
Overview
Governor Pataki's 1999-2000 Executive Budget includes a number of major
provisions that will further improve New York's business climate. Highlights
include new tax cuts totaling $1 billion; implementation this year of
previously enacted tax cuts; mandate-relief and other proposals to reduce
local taxes; and reform and reduction of growth in the state's debt.
New tax cuts
- The bank and insurance tax rates would be reduced from 9 to 7.5 percent,
matching the 1998 legislation affecting Article 9-A corporations, but
implemented a year later than the Article 9-A reductions. The overall
limitation on tax liability for property-and-casualty insurers would
be reduced from 2.6 to 2.0 percent.
- State taxes on energy utilities would be reduced and completely restructured,
generally in ways long sought by utilities and business ratepayers.
- The alternative minimum tax would be reduced further, from 3 to 2.5
percent, increasing incentives for manufacturers and securities firms
to invest in New York State.
- Middle-income workers and many small businesses would benefit from
a $600 million reduction in personal income taxes in 2002-2003.
- Other newly proposed tax cuts include a "capital asset exclusion" of
part of the gains from the sale of assets used in a business in New
York; acceleration of the elimination of assessments on hospitals and
nursing homes; and a credit for businesses that create 25 or more new
jobs in a city. For details, see section on Taxes, below.
Implementation of existing tax cuts
- The corporate income tax rate falls from 9 to 8.5 percent for calendar
year 2000, for most companies.
- The state's added estate tax is repealed as of February 1, 2000.
- The gross receipts tax on utility customers drops another 3/4 percent
as of January 1, 2000.
- The alternative minimum tax drops to 3 percent on July 1, 1999.
Mandate relief
- The Wicks Law (requiring multiple contractors) would apply to projects
valued at more than $2 million, in most localities, compared to the
current threshold of $50,000. The level would be $5 million in municipalities
with more than 500,000 residents, and $10 million in New York City.
- Binding-arbitration panels for police and firefighter contracts would
have to give first priority to a municipality's ability to pay without
raising taxes.
- Future unfunded mandates would be banned by a proposed Constitutional
amendment.
- Counties and New York City would save hundreds of millions of dollars
through proposed reductions in Medicaid spending.
Debt reform
- Currently projected levels of future-year debt would be reduced by
$4.7 billion, by reducing borrowing and paying for more capital projects
on a cash basis. While state-supported debt would rise to $41.9 billion
by the 2003 fiscal year under the five-year capital plan enacted in
1998, this year's Executive Budget projects debt of $37.2 billion in
five years. State-supported debt now totals $36.1 billion.
- Service on state-supported borrowing (the amount spent to pay interest
and partial principal on existing debt), which totals $3.4 billion
in the current fiscal year, would rise to $3.9 billion in 1999-2000.
Debt service would rise further in each of the two following years,
to $4.1 billion in 2001-02, and decline in each of the next two years
to $3.9 billion in 2003-04. While growing over the five-year period,
debt service would decline compared to levels in the existing five-year
capital plan, and as a proportion of total state spending.
- Capital spending would rise by 3.4 percent, to $4.4 billion, in the
1999-2000 fiscal year. It would increase slightly the following year,
and decline in each of the three following years to $3.8 billion in
2003-04.
- Pay-as-you-go financing would increase, largely through use of the
state's share of the national tobacco settlement, from 22 percent of
projects in 1999-2000 to 37 percent in 2003-04.
Spending
- State spending would increase by 1.8 percent, measured both by total
expenditures and state-funded spending (the total, minus federal funds).
The increase in the General Fund (the part of the budget that receives
most tax revenues) is even lower, at 1.3 percent. All three measures
represent below-inflation increases. Total spending would rise to $72.66
billion.
- Overall spending restraint is achieved mainly by restricting the
growth in the state's largest spending areas, including education and
Medicaid. In both areas, taxpayer support in New York State will remain
far above levels in most other states. The Business Council will strongly
support the Governor's efforts to restrain spending.
- The state workforce is expected to remain stable, at roughly 191,000
positions.
The economy
- The budget forecasts continuing growth in employment and the state's
overall economy - but more moderate growth, reflecting expected national
trends.
- Private-sector employment growth is projected at 1.4 percent, or
roughly 100,000 jobs. Jobs in the manufacturing and financial sectors
are expected to decline slightly, and other sectors to add jobs.
Taxation
Bank Tax
Reduce the 9% income tax rate as follows:
- 8.5% for tax years starting after 6/30/00 (calendar year 2001);
- 8% for tax years starting after 6/30/01 (calendar year 2002);
- 7.5% for tax years starting after 6/30/02
(calendar year 2003).
- The Metropolitan Commuter Transportation
District surcharge will still be computed as
if the income tax rate were still 9%.
Corporation and Utilities Taxes(Article 9)
Corporation Franchise Tax (Article 9-A)
Estate and Gift Tax
- Conform State law to the Federal Reform and Restructuring Act of
1998 regarding closely-held business deductions thereby providing some
$1 million tax relief in Fiscal Year 2000.
Insurance Tax
Reduce the 9% income tax rate as follows:
- 8.5% for tax years starting after 6/30/00 (calendar year 2001);
- 8% for tax years starting after 6/30/01 (calendar year 2002);
- 7.5% for tax years starting after 6/30/02
(calendar year 2003).
- Reduce the 2.6% of premiums cap on property
and casualty companies to:
- 2.4% for tax years starting after 6/30/00
(calendar year 2001);
- 2.2% for tax years starting after 6/30/01
(calendar year 2002); and
- 2% for tax years starting after 6/30/02
(calendar year 2003).
- The Metropolitan Commuter Transportation
District surcharge will still be computed as
if the income tax rate were still 9% and
the cap were still 2.6%.
- Effective for tax years starting on or after
1/1/01, repeals the requirement that the State
Insurance Fund compute its tax only on the
basis of the cap.
Personal Income Tax
- Increase the $1000 dependent exemption to $1500 on 1/1/02 and to
$2000 on 1/1/03.
- Raise the start of the 6.85% tax bracket from $40,000 (married),
$20,000 (single), and $30,000 (head of household) to $50,000, $25,000,
and $37,500, respectively, on 1/1/02 and to $60,000, $30,000, and $45,000,
respectively, on 1/1/03.
- Clarify that land set aside or retired under a Federal supply management
or soil conservation program is eligible for the school property tax
credit for agricultural land and expand the base acreage eligible for
a full tax credit for agricultural land after 1998 to include land
enrolled or participating in a Federal environmental conservation acreage
reserve program as established in the 1996 Farm Bill.
Petroleum Business Tax
- Effective 12/1/99 repeal the $25/month minimum tax on petroleum
businesses.
- Effective 12/1/99 repeal the $2/month minimum tax on aviation fuel
businesses.
Real Property Tax
-
Notwithstanding Section 102, subdivision 12, paragraph (f), retain
as taxable movable machinery and equipment which is used in the generation
of electrical power for sale directly or indirectly to the public,
which was subject to taxation on a final assessment roll completed
in 1998, and which would otherwise become wholly exempt from taxation
due to either a change in ownership or the repeal of Section 186 of
the Tax Law as follows:
on a final assessment roll completed in 1999 - 100%
taxable;
in 2000 - 90% taxable;
in 2001 - 80% taxable;
in 2002 - 70% taxable;
in 2003 - 60% taxable;
in 2004 - 50% taxable;
in 2005 - 40% taxable;
in 2006 - 30% taxable;
in 2007 - 20% taxable;
in 2008 - 10% taxable.
Sales and Use Tax
Effective immediately and applicable to the 9/1/99 price adjustment:
- Round to the nearest whole cent the amount of prepaid Sales and
Use Tax per package of cigarettes; and
- Provide for a replacement inflation index used to adjust the base
retail price of cigarettes for purposes of calculating the amount of
prepaid Sales and Use Tax. The numerator would be the sum of the manufacturer's
list price for a carton of standard brand cigarettes and the applicable
New York cigarette tax on the first day of each month for the immediately
preceding twelve months ending in June of that year; the denominator
would be the sum of such prices and taxes on the first day of each
month for the twelve months ending in June of the preceding year.
- Extend for five years through 11/30/04 the special provisions requiring
Manhattan parking service vendors to keep and file additional records
detailing each parking service transaction and authorizing the Department
of Taxation & Finance to conduct unannounced "walkabouts" of parking
garages for observational purposes.
- Effective 4/1/99 clarify that "gas service" and "electric service",
respectively, include gas or electricity itself, as a commodity or
as a part of an integrated service where the commodity is bundled with
delivery and other components of a gas or electric service, the transportation,
transmission, or distribution of the gas or electric service, either
itself or similarly bundled with the commodity, metering service, meter
reading, billing or collection services, and capacity and demand charges,
even if unbundled and furnished by a separate service provider, as
well as ancillary services currently in the rate base but which may
be separately charged for the future.
- Effective 4/1/99 clarify that "use" includes the right or power
over gas, electric, and other services subject to use tax.
- Effective 6/1/99 impose a use tax on gas service or electric service.
- Effective 4/1/99 clarify that school districts' use tax on utility
services includes telephone answering services.
Economic Development
Contact: Ken Pokalsky
Empire State Development Corporation
$117 million for economic development projects to be allocated to the
following programs in the following amounts:
- Economic Development Fund
$40 million
- Jobs Now Program
$45 million
- Minority & Women's' Business Enterprise Program
$3.5 million
- Urban & Community Development Program
$3.5 million
- New York Stock Exchange
$10 million
- Griffiss Air Force Base redevelopment
$2.5 million
- Plattsburgh Air Force Base redevelopment
$2.5 million
- Empowerment Zones
$10 million
Department of Economic Development
- Economic Development Zone administration
$2.9 million
- Clean Air Program
$.5 million
- Business Marketing
$4.5 million
- I Love NY
$11 million
- Tourism Matching Grants
$4.27 million
- Science & Technology Program
$5.6 million
- Manufacturing Extension Partnership Program
$5 million
Transportation
- Industrial Access Program
$25 million
Education and Job Training
Contact: Marg Mayo
- Provides an increase of $154 million in general support for public
schools on a school year basis. Note: this amount does not include
ALL programs and it is less than the amount schools would receive if
current statutory provisions were not modified. However, the Executive
Budget would raise overall state support for schools to $11.9 billion.
- The Governor also recommends the creation of a $200 million block
grant program (out of the consolidation of various categorical programs),
that would promote flexibility at the school district level. This Educational
Improvement Block Grant would be created to provide flexible, needs-based
aid to all school districts. Also, during the 30-day amendment period
the Governor will propose a new program to ensure children in the "Big
Five" city schools can meet the challenges of the new fourth-grade
reading and writing tests.
Other recommend reforms and enhancements:
- Charter Schools Stimulus Fund/Federal Grants: $1 million
in General Fund support for the Charter School Stimulus Fund would
be used for study grants, start-up costs and facility expenses and
$10 million in new appropriation authority for receipt and expenditure
of potential Federal grants awards;
- Charter Schools Implementation Support: Provides $750,000
in operational support for activities of the State University of New
York's new Charter Schools Institute, as well as $275,000 for the State
Education Department's Charter School activities. In addition to serving
as a sponsor for new Charter Schools, the Institute will monitor results
under the new legislation.
- School Violence: Lieutenant Governor Mary Donohue will chair
a Task Force on School Violence to develop aggressive ways to rid our
schools of violence. The Governor will also reintroduce legislation
to allow teachers and principals to remove disruptive students from
the classroom. The legislation would require that school districts,
in conjunction with community leaders, develop a "code of conduct" that
defines standards of acceptable behavior, penalties for violations
and methods of enforcement. It would also require the inclusion of
school violence data in the recently established school report cards.
- Literacy First for 4th Graders: Provides for the
creation of a Literacy First summer school initiative that will provide
intensive remediation to ensure our young learners have a solid foundation
in the reading and writing skills required for academic success. Beginning
with the summer of 2000, the State would provide 80 percent funding
for school districts that choose to provide six-week summer remediation
programs for fourth graders who fail to meet the proficiency requirements
of the Regents new English Language Arts test. In the 2000-01 school
year, $30 million in State funding would be provided for this initiative.
- English Immersion: Provides for Literacy First summer programs
for children in grades K-2 who have limited English skills. The 2000-01
school year cost is $10 million.
- Advantage Schools: Recommends $10 million for this after-school
program which would bring together schools, parents, and community
organizations to provide a secure and enriching environment for children
after school ends, but before many parents are home from work, during
the hours of 3 to 7 p.m.
- Accountability: Will recommend legislation to curtail the
State Board of Regents' powers to unilaterally impose costly regulatory
mandates on school districts. In addition, the Governor proposes to
eliminate tenure for school principals and assistant principals to
ensure that high standards of performance extend beyond the classroom
and into the principal's office.
- Technology Investment: Recommends increasing funding for
educational technology by 17.5 percent to $36.6 million in hardware
and software aid in this budget.
- Textbook Aid: Recommends a 14 percent increase to $151.3
million. By 2001-02, aid will more than double from $36 per pupil in
1996-97 to more than $78 per pupil.
- Special Education: Recommends changes to the special education
system to ensure that children are taught in regular classrooms whenever
possible through a new flexible State special education funding formula
for school-age children to become effective in the 2000-01 school year,
and to ensure compliance with new Federal requirements. Under the recommended
new formula, school districts could use State funds for services --
such as speech therapy and counseling -- to support special needs students
in a regular classroom setting.
- Preschool Special Education: Recommends reforms that would
address the conflict of interest that can result when private providers
perform evaluations which then serve as the basis for referral to special
education.
- BOCES Reform: Recommends that school districts be given greater
flexibility to take advantage of cost savings opportunities through
shared service arrangements outside the existing BOCES system. The
existing BOCES funding formula currently supports nearly 65 percent
of local costs -- an amount far greater amount than other needs-based
school aid formulas, such as operating aid. This results in an incentive
for school districts to use BOCES as a way of leveraging State aid
-- regardless of the actual cost-effectiveness of these BOCES services.
Under the Governor's proposal, BOCES aid would be phased out beginning
in 1999-2000, and funding for shared services would be provided through
operating aid beginning in 2000-01.
- Building Aid: For the 1999-2000 school year, building aid
would increase by $120 million, or 14 percent, to a total of $970 million.
The budget recommendation includes the creation of a new School Facilities
Development Unit in the State Dormitory Authority to help school districts
reduce their construction and borrowing costs. School districts that
use this new Unit would also benefit from an exemption to Wicks Law
requirements.
School Property Tax Reform
- To ensure that STAR savings to homeowners are not eroded the Governor
is proposing to limit future school tax increases in school districts
with a demonstrated history of overspending. Despite record State school
aid increases in the past two years, local school property taxes continue
to increase faster than both inflation and enrollment levels.
- The Governor's tax cap plan will only apply to school districts
with two-year average spending increases that exceed the lesser of:
four percent or 140 percent of the increase in the CPI (Consumer Price
Index) after certain exclusions for enrollment growth, voter approved
capital projects, court orders, emergencies and other unique fiscal
events.
- After two years of such spending in a school district, the property
tax levy increase in the next budget would be limited to the lesser
of four percent or 120 percent of the increase in the CPI for the prior
year. Spending and levy increases attributable to the excludable items
mentioned above would not be included in the levy increase limit.
- Subsequent passage of a tax levy increase in excess of the amount
allowed under the tax cap would require a two-thirds majority, unless
more than 50 percent of eligible voters voted, in which case only a
simple majority would be required. "Big Five" cities already have constitutional
tax limits and would not be included in this measure.
Truth in Taxation
- A Property Tax Report Card: Schools would be required to
report details of proposed budgets and tax levy increases to the State
Education Department. The Department would then publish a "Property
Tax Report Card" prior to the budget voting day, enabling taxpayers
to see how the proposed budget and tax levy changes in their school
district compare to other districts around the region and across the
State.
- Full Disclosure: School districts would be required to inform
voters, prior to the statewide school budget voting day in May, on
how a proposed budget compares with the maximum contingency budget
allowed, should the budget proposal be defeated twice. Also, school
districts proposing budget increases of more than 140 percent of the
increase in consumer prices (CPI) for the prior year, or more than
four percent, would be required to notify affected taxpayers of the
proposed increase in a separate mailing one week prior to school voting
day.
Higher Education
- The Governor's budget recommends the transfer of a number of programs
from the State Education Department to the Higher Education Services
Corporation. They include the following programs:
- Bundy Aid ($44.25 million)
- HEOP ($16.4 million)
- Liberty Partnerships ($11.0 million)
- STEP ($7.5 million)
- The Governor's budget recommends nearly $6.7 billion in total funding
for services and programs at public and private institutions of higher
education. Of that $2.6 billion is recommended for SUNY and CUNY operations.
Also recommends $59 million in cash savings in SUNY and CUNY through
continued efforts to improve cost-efficiency and productivity.
- Recommended funding levels anticipate no increase in undergraduate
resident tuition rates of $3,400 at SUNY and $3,200 at CUNY.
- For 1999-2000, State operating aid for SUNY and CUNY community colleges
will be continued at the same level as in 1998-99 -- providing State
support of $2,050 per full-time equivalent student.
- The budget also recommends continued implementation of the $3 billion
SUNY/CUNY Capital Investment Plan that was initiated in 1998-99.
Tuition Assistance Program
- $501.1 million is recommended for the Tuition Assistance Program
(TAP). Pursuant to this recommendation 1999-2000, TAP expenditures
will decrease by $133 million with nearly $19 million attributable
to declining participation due to income increases generated by an
improved economy, and approximately $114 million attributable to a
proposed TAP restructuring.
- A restructured TAP is recommended to provide a vehicle for promoting
timely completion of degree programs. Currently, fewer than two of
every five college students in New York complete their baccalaureate
degree in four years -- often because they enrolled in less than 15
credits each semester. In fact, fewer than half of SUNY students and
fewer than one-third of CUNY students currently take 15 credits per
semester.
- Students participating in TAP would be expected to enroll in and
complete 15 credits each semester. Students enrolling in and earning
15 credit hours would receive a full TAP award, while students enrolling
in 15 credits but earning fewer than 15 credits would receive 80 percent
of a full TAP award.
- Additionally, students would be expected to contribute a minimum
of 25 percent -- rather than the current 10 percent -- towards the
cost of tuition. However, as a reward for successfully completing their
degrees in four years (or two years for an associate degree), students
would receive a TAP "dividend" which, when added to regular TAP awards,
provides more aid than available under the current TAP program. This
restructuring, together with limiting the availability of TAP to two
years for associate degree programs and use of the Federal Adjusted
Gross Income (AGI) as the basis of determining TAP awards, would achieve
$114 million in TAP savings for 1999-2000.
Other Higher Education Services Corporations Programs
- Scholarships for Academic Excellence program: includes $10.5 million,
an increase of $3.5 million for 1999-2000 which would support 8,000
new annual awards and continue aid for existing scholarship recipients
attending public or private colleges in New York State.
- Funding of $564,000 is recommended for the second year implementation
of the College Choice Tuition Savings program. Families participating
in this program will also be able to take advantage of Federal tax
deferrals on the interest earned on the college savings accounts.
Job Training
Proposed Fee Increases
- Air permit emission fees for "major facilities" (covered by Title
V permits) will increase to $48 per ton for calendar 1999; in subsequent
year, this fee amount will be indexed to the consumer price index.
These fees are currently "capped" at just under $33 per ton. There
is no proposed change to the contaminants or tonnage of emissions subject
to this fee. This fee income is dedicated to financing one hundred
percent of the state's Title V permit program.
- Fees on registered petroleum bulk storage facilities will be increased
to $100 for facilities with storage capacity between 1,100 and 2,000
gallons; $300 for those with capacity between 2,000 and 5,000 gallons;
and $500 for larger facilities. These fees are payable once every five
years. They are currently set in regulation at $50, $150 and $250,
respectively. There are about 15,000 oil storage facilities in the
state. This fee income is used to finance the state's oil spill cleanup
program.
- The existing "licence fee" on major oil storage facilities and vessels
(over 400,000 gallons capacity) will increase from $.04 per barrel
to $.08 per barrel of petroleum transferred through such facilities.
This would raise about $12 million per year. This fee income is also
used to finance the state's oil spill cleanup program.
Spending Proposals
- The general operations budget for the Department of Environmental
Conservation will increase slightly to $352 million (about 1 percent.)
Annual funding for the state oil spill cleanup program will increase
to $34.2 million.
- The Title V air permit program will be "fully funded" at about $16
million.
- The proposed budget stated that the Governor will be proposing a "superfund" refinancing
proposal once it receives final recommedations from the "Superfund
Working Group" appointed last fall.
- The budget includes funding to initiate the state's new heavy duty
vehicle emission "inspection and maintenance" program.
- Spending from the "Environmental Protection Fund," which is financed
primarily by revenues from the real property transfer tax, will increase
from $100 million to $125 million. The EPF finances land acquisition
and open space programs; parks projects; municipal landfill closure
and recycling efforts; the state's "pesticide use database;" and other
types of projects. The Hudson River Park and Hudson River Estuary program
will receive major funding increases under this proposal (about $34
million in total).
- A total of $283 million in addition spending is authorized from
the 1996 "Clean Water/Clean Air" bond act. These funds are used to
implement water resource management plans, land acquisition, water
quality and safety projects, state and municipal parks projects, state
facility environmental compliance projects, small business compliance
assistance efforts, and other project categories.
Construction
- Provides funding of $1.4 million to implement legislation, included
in the Executive Budget, authorizing the adoption of model fire prevention,
building and energy codes.
- Creates a new School Facilities Development Unit within the State
Dormitory Authority to provide school districts with lower borrowing
and construction costs as well as relief from Wick's law requirements.
- Increases the building aid for schools by $120 million, or 14%,
to a total of $970 million.
- Provides for the continuation of the Governor's Capital Investment
Program. Capital recommendations for state-operated colleges total
$330 million including $287 million in bonded projects for academic
and other facilities and $43 million in hard dollar capital funding.
- Exempts certain construction projects within municipalities from
the Wick's Law. Provides for a $2 million exemption for most municipalities,
a $5 million exemption for large municipalities and a $10 million exemption
for New York City.
- Provides for a new program for Revitalization Projects and Infrastructure
Renewal (RePAIR). The program will be administered through the Department
of State and will provide $5 million of assistance to urban governments
for demolishing and clearing abandoned buildings and vacated industrial
and commercial structures.
- The Governor's goal for 1999-2000 is to bring Medicaid costs in
line with the rest of the nation. Accordingly, the budget proposes
measures to reduce the cost of the state's Medicaid program by $511
million.
- The Governor proposes eliminating the assessments on hospitals,
nursing homes and home care providers effective April 1, 1999 - one
full year early. This action will reduce provider taxes by $223 million
next year.
- The budget proposes reductions to hospital reimbursement rates,
achieving $89 million in State Medicaid savings in 1999-2000. The Governor
proposes reducing support for graduate medical education in order to
reduce the number of residents trained.
- The budget provides over $450 million in State and Federal funds
for Child Health Plus.
- $100.9 million to provide prescription insurance to more than 105,000
senior citizens.
- $1 million for breast and ovarian cancer detection and education
services, from the Commissioner's Health Care Reform Act priority pool.
- $1 million to continue funding for the cancer mapping project from
the Commissioner's Health Care Reform Act priority pool.
- $5 million to continue the operations of poison control centers
- including $2 million from the Commissioner's Health Care Reform Act
priority pool.
- $550,000 for the Governor's diabetes initiative to support efforts
to prevent diabetes and to help children with diabetes control their
disease.
- $5 million to create a new biotechnology research center at SUNY
Buffalo
- $3 million to support the University of Rochester's new Institute
for Biomedical Sciences.
- $200,000 in new funding to support pilot projects to provide asthmatic
children with care and to conduct a statewide education campaign to
increase awareness of the dangers of asthma.
Labor & Welfare Reform
Contact: Tom Minnick
- As part of the changes enacted in last year's Unemployment Insurance
Reform bill, the Department of Labor will operate a re-employment services
program.
- Employment, transportation, and education to help welfare recipients
get jobs: $200 million.
- Recipient assessments to address barriers to self-sufficiency and
incentives for children to attend school: $68 million.
- Support for the Child Care Block Grant: $188 million for 1999-2000
and an additional $200 million for services through March 31, 2002.
- Investment in the New York Works Compliance Fund to develop computer
tracking systems necessary for welfare reform: $50 million.
- $192 million in fiscal relief to counties and New York City through
child welfare services and related State savings of $165 million.
Energy & Telecommunications
The Executive Budget recommends a wide-sweeping overhaul of energy taxation
in recognition of the current transition to competitive electric markets,
and includes the following proposals:
- A repeal of the natural gas importation privilege tax (GIPT), §189
of the New York State Tax Law.
- A repeal of the current franchise tax on gross receipts (.75%) and
excess dividends (4.5%) §186.
- All energy utility companies would be required to file under Art.
9-A, net income, from Art. 9, gross earnings. Article 9 receipts are
expected to decrease by $309 million. A conversion from Art. 9 to Art.
9-A allows energy utility holding companies in the state the opportunity
to file combined returns, therefore eliminating the subsidiary capital
tax.
- A repeal of the .75% gross receipts tax (GRT) on sales of electricity
for resale.
- A phase out of the GRT on the commodity portion of electric charges,
from the current rate of 3.25%, beginning in 1999 and ending in 2003
(§186-A).
- A new compensating use tax is proposed on the importation of energy
from outside of New York State. This tax will be imposed at the state
and local level and at the same tax rate as the current sales tax rate.
- Energy service companies participating in retail access programs
will be allowed a one-year "transitional tax credit" equal to the state
sales tax paid by retail access customers on their transmission and
distribution bills.
- The Department of Public Service has been recommended for an appropriation
of $61,566,700 for fiscal year 1999-2000, a decrease of $3,944,200
from total funds available in 1998-99. A reduction in 68 staff positions
is also recommended. The Department is the staff arm of the Public
Service Commission (PSC), which regulates the rates and regulates rates
and services of the state's public utilities, including electric, gas,
steam, water and telecommunications.
- The Governor also recommends a $30,523,000 appropriation for the
New York State Energy Research & Development Authority (NYSERDA),
unchanged from the operating budget proposed for 1998-99. State operations
account for $17,906,000 and Capital Projects total $12,617,000. Reappropriations
from the 1998-99 fiscal year are $3,722,000. NYSERDA will also continue
to administer the $235 million Systems Benefits Charge Fund which provides
financing for projects in energy research & development, market
transformation and low income assistance programs.
Technology
- The Governor's Chip Fab-New York Program will pre-permit up to ten
sites around the State for new chip manufacturing plants and give New
York a significient advantage in the global competition for siting
these plants.
- Utilizing the same pre-permitting concept as above, Build Now-New
York will pre-qualify 30 New York sites to attract expansion or relocation
of a wide variety of emerging and growth industries.
Transportation
- The Executive Budget implements the final year of the current five-year
transportation capital plan, maintaining total investments in highway
and bridge construction at $13 billion. According to the Governor's
proposal, construction contract awards will total $1.5 billion in 1999-2000,
down from a record setting $1.7 billion during 1998-1999. The budget
preserves annual base level funds for the next five year capital plan
at $1.5 billion and recommends substituting "pay-as-you-go" financing
for bond-financed projects.
- The budget includes $192.3 million for the Consolidated Local Highway
Improvement Program (CHIPS), down from the Governor's $218 million
appropriation last year. The CHIPS program provides state and federal
monies to assist localities in funding the repair and construction
of roads and bridges.
- The Governor recommends $35 million for the 1999-2000 Marchiselli
program, a decrease of $5 million from last year. This program assists
localities in leveraging financing for the repair and construction
of roads and bridge infrastructure projects.
- The budget includes $85 million for a new Department of Transportation
Rail Freight program intended to improve and stimulate the use of freight
systems that serve municipalities, businesses and ports across the
state.
- Overall engineering resources will decrease to $540 million from
$605 million. The Department of Transportation budget formula also
calls for 167 staff reductions to reflect lower construction levels,
including 136 positions under design and construction.
The 1999-00 Executive Budget continues to
fulfill the commitment to revamp the operations
of the Board by providing:
- $9.5 million to complete the conversion
from a paper-based, manual claims processing
operation to a paperless "electronic
case folder".
- $3.5 million to complete
the restructuring of the Board's administrative
and district offices.
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